Cathay Pacific to buy back warrants from HKSAR government
After thorough negotiations
Cathay Pacific Airways (Cathay) has agreed to repurchase all the warrants previously issued to the Hong Kong Special Administrative Region (HKSAR) government. The transaction will involve a minimum total consideration of HK$1,531,828,439.28.
However, the final amount will be adjusted based on share price fluctuations during a specified period between the signing and the deal’s completion.
The buyback is slated for completion on the tenth business day following the agreement’s date, after which the warrants will be cancelled. This move aims to prevent any potential dilution of Cathay’s shares, benefiting current shareholders.
The buyback terms were established following thorough negotiations and are deemed fair and reasonable for Cathay and its investors. The airline plans to finance the buyback through its existing financial resources, ensuring no disruption to its investment plans.
The warrants were initially issued as part of Cathay’s HK$39 billion recapitalisation plan in 2020, which included HK$19.5 billion in preference shares with warrants to the HKSAR government, an HK$11.7 billion rights issue of ordinary shares to existing shareholders, and a HK$7.8 billion bridge loan facility from the HKSAR Government. The latter was not utilised and expired on June 8, 2023.
Ronald Lam, Cathay’s Chief Executive Officer, said: “The recapitalisation in 2020 was crucial for us to navigate the industry downturn caused by the global pandemic and to uphold our role as a major international aviation hub for Hong Kong.
“Our robust financial performance in the first half of 2024 has given us the confidence to proceed with this warrant buyback. As we conclude this chapter, I sincerely thank the HKSAR government and our shareholders for their steadfast support.”
In addition to the warrant buyback, Cathay recently repurchased all remaining preference shares from the HKSAR government. Cathay paid HK$2.44 billion in dividends throughout its holding period on these shares.
Featured image: The airline plans to finance the buyback through its existing financial resources. Credit: Cathay Pacific
